Monthly Archives: January 2016

We hope that everyone had a happy holiday season. For a lot of people, Christmas came one week early this year. On December 18th, the US House of Representatives and US Senate passed a massive (2,009 page) spending and “tax extenders” bill, which paired two pieces of legislation – a $1.15 trillion spending bill and a bill that contains a number of provisions that affect the taxation of businesses and individuals. Some pundits have opined that the primary benefit of this legislative “success” was that it enabled the federal government to remain open, and the full faith and credit of the government was left intact. The reality is that much of this spending should not have been approved, and the full faith and credit of the federal government has taken yet another hit because of this legislation.

The “omnibus” appropriations bill funds all of the government’s agencies for the current fiscal year that began on October 1st. Keep in mind that this $1.15 trillion of spending represents the “non-mandatory” portion of federal spending (29% of the total). The remaining 71% of the government’s cash outflows was not even addressed by this spending bill, because that portion of the federal government’s spending is for debt service and for “entitlements” that are on automatic pilot, using formulas that career politicians do not have the courage and/or will to change.

Congress also passed the Protecting Americans from Tax Hikes (PATH) Act, which extended various tax breaks, preferences, deductions and credits. Unfortunately, with the 2016 deficit already budgeted to be in excess of $470 billion, our elected representatives felt a need to “protect” us from tax hikes. But what we really need is protection from any further spending increases. The total cost of these “tax expenditures” (lost tax revenues) is estimated to be in excess of $622 billion over the next ten years. Some estimates put the cost as high as $680 billion.

The tax breaks for certain sub-segments of the country’s citizens include residential energy conservation credits, teachers’ classroom expense deductions, “transit benefits” for mass transit and parking benefits, the child tax credit, the earned income credit, qualified tuition deductions and other education credits, but no “free” college education (yet).

An Associated Press release was issued the day after this legislation was signed into law. The final sentence summed it up fairly well – “Congress’ top leaders of both parties took turns claiming credit for the holiday-season largesse.” It’s probably safe to say that many of our country’s citizens are excited by the thought of all of this “free money” being doled out by the federal government. But the truth of the matter is the Washington cartel has once again hit future generations with a double-whammy. The appropriations bill busts the spending caps that Congress approved in 2011, and Congress continues to dole out tax breaks to special interest groups (both favored businesses and select sub-segments of the country’s citizens).